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EUR/USD: Sellers claim near-term control; large expiries cloud the picture

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EUR/USD is trading back below the 200-hour MA post-FOMC meeting


Sellers drove the pair lower following the Fed statement overnight and we saw breaks of the 100-hour MA (red line) as well as the 200-hour MA (blue line) which means that sellers are now in near-term control of the pair as price bias turns more bearish. The overnight low touched the 5 November low @ 1.1354 but in trading today price has broken back below that.
Based on price action, we’re headed back towards a retest of the year’s low near 1.1300 again but the issue in trading today is that things aren’t so straightforward, not when there are plenty of large expiries sitting in the way here.
The dollar remains bid as it strengthens following the US midterm election results but in this pair, trading could be susceptible to option-related flows especially when the expiries are this large.
With the Fed reaffirming their stance yesterday, it means that December is very much a slam dunk at this point for a rate hike and 2019 will at least begin in similar fashion i.e. a rate hike at every other meeting. That puts the focus back on rates and monetary policy divergence and that will underpin the greenback as we close out the year.
I still view that price action is suggesting a move lower for the pair even at current levels but shorting opportunities were of course much better when price broke the 100-hour MA yesterday. The issue with following a move to the downside from here is that the large expiries above are clouding the picture for today and price can be prone to be drawn to the large expiries where flows come in.
I suggest letting it roll off and see where we are before proceeding from there if you haven’t found any entries. Should price bias still be more bearish in the near-term, then it paves the way for a move lower to test bids near 1.1300 again.

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